Question

Loyalty or reward programs are becoming more and more prevalent. With the onset of more loyalty programs, it becomes important for companies to design programs that are differentiated from other competitor programs. What are at least three key aspects that a company must consider when developing a successful loyalty/reward program? Give an example to support your view.

Answer 1

Some of the important aspects of a good loyalty program are-

• Interactive and Gamified Experience - The company should regularly prompt the customer about the new offers and their next loyalty program milestone. They can also peg some added rewards on a customer reaching a particular milestone. Therefore, we should attempt to engage and seek higher participation from the customers in the programs. Example - Starbuck have a Bonus reward section which informs customer about the reward they can avail on reaching the next milestone, like having 10th coffee at Starbucks will earn you a free sandwich.
• Different Way of earning Reward points - Company should establish dynamic and muliple channels of earning rewards points. There should be very limited constraint on the way in which the rewards could be earned. On establishing multiple channels, the customer would be more engaged with the brand and thus meeting the objective of loyalty program. Example - Bank of America implements culinary rewards points offer that gives 2x rewards point which its card product is used to pay at restaurants during weekends.
• Valuable and Relevant rewards - The assortment of rewards should consist of valuable and worthy rewards, so as to receive a sustained interest from the customers. Non-exclusive rewards would basically filter down the essence of the reward concept. Moreover, the rewards should be closely associated to the customers, it is being provided too. Irrelevant rewards will dampen the effectiveness of the program itself (a person subscribing to diet program should not be offered free coupans of McDonald's) For example - Gold Gym providing discount coupans for Supplements products brands.
• Consistency in rewards- All customers should be equally treated without any prejudice and bias. We can have different segment of customer loyalty programs but it should be well explained to the customers. They should not feel neglected and biased against in the loyalty program. For example - Starbucks offer is consistently available for all segment of soceity without discrimination.

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